Breaking

U.S. Average Pump Price Falls to Lowest Level Since 2011

Nov. 8 (Bloomberg) -- Americans are paying the least to
fill their cars in almost two years as refiners process the most
crude in a decade, offering some relief to nervous consumers.

The national average retail price sank 1.1 cents to $3.211
a gallon, the lowest since Dec. 20, 2011, AAA, the nation’s
largest motoring club, said on its website today. Pump prices
are approaching the lowest level since February 2011, just
before unrest in the Middle East pushed U.S. crude oil above
$100 a barrel and gasoline near $4 a gallon.

“We’re probably just a few days away from seeing the
cheapest gas prices since February 2011,” Michael Green, a AAA
spokesman in Washington, said by telephone. “Our official
estimate would still be that we’re going to drop to $3.10 a
gallon by the end of the year. At the rate we’re going, it
wouldn’t be surprising if we even go a little lower.”

U.S. refiners are processing the most crude and other
feedstock for this time of year since 2003, having expanded to
take advantage of surging domestic and Canadian supply. U.S. oil
production grew in October to the highest level since March 1989
as advances in drilling techniques boosted output from shale
formations. The Bloomberg Consumer Comfort Index declined to
minus 37.9 in the week ended Nov. 3, the worst reading since
October 2012, from minus 37.6 the previous week.

Consumer Savings

If prices fall to AAA’s year-end target, that 11-cent drop
will save the average driver about $1.24 each week, or $64.31
annually, according to data from Michael Sivak of the University
of Michigan’s Transportation Research Institute.

Retail prices have fallen 38.3 cents since August, with the
2013 Atlantic hurricane season that ends Nov. 30 shaping up to
be the first in almost two decades without a major storm
disrupting Gulf Coast crude and fuel production.

West Texas Intermediate crude prices on the New York
Mercantile Exchange have fallen 12 percent and gasoline futures
on the Nymex have dropped 16 percent since August.

“The ongoing purge that we are seeing in prices at the
pump is of course reflective of what we’re seeing in the
wholesale markets, and we’ve had a nice pullback on crude oil
prices,” Stephen Schork, the president of Schork Group Inc. in
Villanova, Pennsylvania, said by phone. “We’re now kind of at
the nadir of demand.”

Crude traded in New York jumped 35 percent to $113.93 a
barrel April 29, 2011, from $84.32 on Feb. 15 of that year on
concern unrest in Libya would spread and reduce supply from the
Middle East. Pump prices surged 85.2 cents to $3.985 a gallon in
early May 2011 from $3.133 in February.

Below $3

About 19 percent of gas stations were charging less than $3
a gallon yesterday, with only 2 percent selling regular for more
than $3.75, according to AAA’s Green. Drivers in 38 states had
access to at least one station selling the fuel for below $3.

“There hasn’t been a major hurricane disruption,
refineries have run smoothly and there’s more refining capacity
in North America,” Green said. “We’re also looking at a time
when you generally see declining demand, a drop in the cost of
oil and a switch to less-expensive winter blend gasoline.”